A Legal and Ethical Examination of Corporate Tax Shelters

In: Business and Management

Submitted By cowsgomoo113
Words 3337
Pages 14
This paper seeks to glean an understanding of corporate tax shelters, in respect to legal and ethical considerations. Tax shelters are often viewed with negative connotations, yet the general public holds different perceptions of the various classifications of tax shelters, tax avoidance, tax evasion, and tax flight (Kirchler, Maciejovsky, & Schneider, 2003). While this suggests a tolerance based on legal concerns, there exists a growing accountability for corporate social responsibility, “whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, and others stakeholders, as well as their environment” (Guliani, 2014, p. 1117). Part of this includes, “companies paying their due taxes and obeying the law” (Guliani, 2014, p. 1120). In order to analyze the ethicality of tax shelters, this paper will introduce a variety of corporate tax shelters, discuss corporate tax shelters in relation to tax avoidance and tax evasion, explore the impact of corporate tax shelters on stakeholders, and examine the affect corporate social responsibility has on tax liability.

A Legal and Ethical Examination of Corporate Tax Shelters As each business embarks on a pursuit for profit, companies often find opportunities to reduce tax liabilities in the form of corporate tax shelters. Corporations should be aware that when reducing tax liability, they must consider the legality and the morality of their actions. While the concept of tax shelters has gained negative connotations throughout the years, “tax shelters are transactions or arrangements that generate tax losses without incurring economic losses or risk” (Lisowsky, 2010, p. 1694). This can be accomplished through both legal, illegal, and questionably legal practices. However, while observing legal…...

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